Almost all global markets seem to be transfixed on Hurricane Irma that could wallop Florida with an unprecedented and merciless blow and have an impact on many lives as well as the U.S. and global economy. Fox News reported that France’s interior minister on Thursday said the category 5 storm killed at least eight and injured 23 on St. Martin. Irma blacked out much of Puerto Rico and is headed toward Haiti and the Dominican Republic.
The storm will go over the Caribbean refining corridor perhaps disabling Caribbean refiners just as U.S. refiners are starting to get back up in the aftermath of Hurricane Harvey. There are worries that massive storage terminals could be destroyed by the storm. Tropical storm Katia has the potential to impact Mexican oil production and could add to Mexican oil shortages that are getting worse. Mexican state-run oil company Pemex said on Wednesday that its facilities were not in danger so far, but it was monitoring Katia’s path to decide if further action is needed.There is about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut in, although a number of the refineries, as well as petroleum handling ports, were in the process of restarting as reported by Reuters.
Shortages of product in Mexico and other parts of Latin America are only going to get worse as oil terminals have been shut and many places can’t get product because of Hurricane Harvey. Reuters reported that Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin American countries that have struggled to meet demand since Hurricane Harvey disrupted shipments from the U.S. Gulf Coast last month. Latin America had already been scrambling for almost two weeks to find cargoes because of Harvey, which caused massive flooding in Texas and Louisiana, shutting down oil ports, refineries and production platforms. Irma, which is being followed by two other hurricanes in the Atlantic, is threatening Caribbean refineries, terminals and storage facilities.
There is over 100 million barrels of storage capacity in the Caribbean, which is crucial for those nations because of limited ability to refine crude, and also supply for South American nations including Brazil, Venezuela and Colombia. Several oil trading firms had moved a portion of their U.S. fuel inventories to the Caribbean ahead of Harvey so they could keep selling cargoes to Latin America, traders from two companies told Reuters. Those barrels are now locked in terminals in St. Eustatius, Puerto Rico and the U.S. Virgin Islands, as Irma, a Category 5 storm with winds of 185 mph (295 kph), is expected to hammer the region for several more days before turning north.
U.S. based Buckeye Partners, the largest owner of oil storage facilities in the Caribbean, with 41.1 million barrels of capacity, said on Wednesday it shut its Yabucoa terminal in Puerto Rico. It is monitoring Irma’s path to decide if it also has to close its largest terminal in the Bahamas. NuStar Energy on Tuesday closed its 13 million-barrel Statia terminal in the small island of St. Eustatius. Firms leasing tanks in closed terminals in St. Eustatius, St. Croix and Puerto Rico include traders Vitol, Glencore, Novum Energy and Freepoint Commodities, and Venezuela’s state-run PDVSA, China’s Sinopec and Russia’s Rosneft, according to the sources and Reuters vessel data.
Restarting refiners helped gas prices sell off but as Floridians look to escape Hurricane Irma’s wrath, there was strong demand and gas lines and shortages, prices did not collapse as the trade awaits what damage could be in store. Still with the projected path of the storm moving a bit more east we are seeing the market adjust a bit. Orange juice futures eased off a bit as the eastward track may not entirely wipe out Florida’s orange and grapefruit crop.
The API showed crude +2.79mm, the biggest build in 5 months. Cushing +669k, gasoline -2.544mm, the biggest draw in 6 weeks. Distillates -610k.
Gasoline prices have jumped in the past week. Nationwide, the average gasoline price was $2.65 a gallon. Tuesday, 30.2 cents higher than a month ago, according to AAA.
Reuters reports oil output at Libya’s Sharara field, the country’s largest, was resuming on Wednesday after a valve was reopened on a pipeline shut by an armed group for more than two weeks, Libyan oil industry sources said.
— Phil Flynn
The current cone has Hurricane Irma still a Category 5 is getting ready to punch Miami in the nose around 2:00 A.M. or veer east which is scary news in the Gulf of Mexico which is another scary proposition. We will be watching events unfold and when she makes landfall. Hurricane Jose a Category 1 is not far behind Irma with Maximum Sustained Winds at 80 knots currently moving west-northwest at 16 knots. And looks at the moment he will move north up the east coast or back out in the Atlantic possibly threatening Bermuda. And we have Hurricane Katia a Category 1 with Maximum Sustained Winds at 70 knots and is nearly stationary in the Gulf of Mexico which is a scary thought churning in the water. She is expected to strike the east coast of Mexico tomorrow afternoon around 1:00 P.M.
Today’s reports are Initial Jobless Claims at 7:30 A.M., EIA Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.M. and Dairy Product Sales at 2:00 P.M. Last night’s API Energy Stocks showed Crude supplies rose 2.8 million barrels while Gasoline stockpiles fell 2.5 million barrels. These numbers somewhat make sense as some U.S. Gulf Coast refineries have restarted operations. In the overnight electronic session the October Crude Oil is currently trading 4914 which is 2 tics lower. The trading range has been 4933 to 4892.
On the Natural Gas front Scott Disavino of Thomson Reuters reports U.S. utilities likely injected a higher-than-normal 64 bcf Natural Gas as demand declined due to cooler weather and havoc caused by Hurricane Harvey. The Thomson Reuters poll of 22 analysts participating range builds from 30 bcf to 83 bcf with the median increase of 64 bcf. This compares to the 1 year build of 58bcf and the five-year average of 63 bcf. In the overnight electronic session the October Natural Gas is currently trading at 3.010 which is 1 cent higher. The trading range has been 3.027 to 3.003.
On the Ethanol front there were no trades posted in the overnight electronic session. The October contract settled at 1.515 and is currently showing 2 bids @ 1.505 and 2 offers @ 1.513 with Open Interest at 932 contracts.
On the Corn front the market is creeping higher ever so slowly from the lows with frost forecasted as a possibility in the next 10 days. In the overnight electronic session the December Corn is currently trading at 359 ¾ which is 1 ¼ of a cent lower. The trading range has been 360 ¼ to 358 ½.
Another issue today is the meeting of the European Cantal Bank (ECB) and what Mario Draghi will say.
— Daniel Flynn
The Price Futures Group’s mission is to provide traders and investors with industry-leading trading solutions, informative market analysis, and cutting-edge technologies which enable efficient decision-making. The Group is available answer marketing questions and meet your investment needs. Find the company online at www.pricegroup.com or call the Chicago office at (888) 264-5665.